FREE TOOL · TRUST ADMINISTRATION

DNI / TAI Calculator

Compute Distributable Net Income (DNI), Trust Accounting Income (TAI), and the Income Distribution Deduction (IDD) for a complex trust. From Chapter 19 of the Trust Administration Guide.

Inputs

Trust receipts

Taxable interest income Ordinary dividends Qualified dividends (subset of ordinary) Tax-exempt interest (municipal) Long-term capital gain Other income (rents, K-1 ordinary)

Trust expenses

Trustee fees Investment management fees Other deductible expenses (CPA, legal)

Distribution & options

Distribution to beneficiaries (TAI) Capital gains allocated to DNI? (1=yes, 0=no) Personal exemption ($100 complex / $300 simple)

Computed values

TAI (Trust Accounting Income) Taxable income before IDD DNI (Distributable Net Income) IDD (lesser of TAI distributed or DNI) Trust taxable income after IDD Beneficiary K-1 (taxable portion)

Estimated trust federal tax (2026 compressed brackets + NIIT)

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Effective top trust rate: 37% above ~$15,200 + 3.8% NIIT on net investment income above same threshold = 40.8% federal at the margin.

How to use this

The Income Distribution Deduction (IDD) shifts trust taxable income to beneficiaries' K-1s, where it is taxed at the beneficiary's typically lower personal brackets. The IDD equals the lesser of: (a) the amount of TAI actually distributed; or (b) the trust's DNI.

Capital gains are typically allocated to principal (not in DNI) unless the trust instrument or the state's power-to-adjust statute reallocates. If gains are in DNI, they pass through to beneficiary K-1s and the trust's taxable income falls correspondingly.

Run this calculator for the prior year in late January to evaluate a 65-day rule distribution (made by March 5 of year+1) that shifts additional DNI to beneficiaries for the just-completed tax year. See the companion 65-Day Election Worksheet tool.

Source: Trust Administration Guide Chapter 19, "Fiduciary Income Tax in Operating Depth."